Its refining operations actually returned
to profit in the last quarter, but analysts were more concerned about a
14 per cent fall in earnings from its production division to
£2.8billion - the company blamed higher costs and exploration expenses.

However, Shell produced 3.41million
barrels of oil or gas equivalents per day - up by 3.3 per cent -
reflecting the impact of start-ups in Qatar and Australia against
declines at existing fields.

The company's refining arm made profits of £761million, compared with a loss of £176.3million last year.

Shell has sold assets in recent years as it looks to improve financial headroom for projects with greater growth potential.

Capital investment in the quarter was
£8.2billion, bringing the total for the year to £23.3billion. It raised
£1.2billion from asset sales in the quarter.

Shell has around 30 projects under
construction in a bid to develop leadership positions in the areas where
it chooses to invest.

It said these should unlock seven billion barrels of resources and drive continued financial and production growth.

Voser added: 'Shell is competitive and
innovative, [we have] unique skills in technology and integration and a
worldwide set of opportunities for new investment.'

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said today's figures failed to inspire the market.

He added: 'There are certainly
positives within the statement. Refining margins improved in the last
quarter, the company's increased investment is part of a long-term
strategy, and the accompanying management comments were upbeat on future
prospects.

'However, the overall profit number
was shy of expectations, costs are on an upward trend within the
industry and the weakness of the gas price has impacted on Shell, which
for the first time sold more gas than oil last year.'